Are Prediction Markets Gambling? Kalshi, Polymarket, Robinhood & the Risk of Addiction

Written By Chris Beerman

Prediction markets have moved from a relatively obscure forecasting tool to one of the fastest-growing forms of speculative trading.

On Kalshi, Polymarket, Robinhood, and similar platforms, you can take a position on whether a team will win, who will win an election, what the Federal Reserve will do, whether Bitcoin will reach a particular price, how hot Chicago will get tomorrow, or even what someone will say during a public appearance.

The language is usually different from a sportsbook. You aren’t necessarily told you’re placing a bet. You’re buying an event contract, taking a position, or trading a prediction market.

But psychologically, the distinction can become much less clear.

If you’re risking money on a binary outcome, checking the market repeatedly, increasing your position after losses, feeling compelled to get back to even, and having difficulty stopping, the question of whether the product is technically classified as a financial derivative may become less important than what the behavior is doing to you.

Prediction markets can be useful forecasting tools. They can also become another way to gamble.

Both things can be true.

What Is a Prediction Market?

A prediction market allows people to trade contracts based on the outcome of a future event.

The basic structure is often remarkably simple. Imagine a market asking: will the Chicago Bears win on Sunday?

A “Yes” contract might trade at 60 cents. The price is generally interpreted as the market assigning roughly a 60% probability to the Bears winning.

If you buy the contract for 60 cents and the Bears win, the contract settles at $1. If they lose, it settles at $0. You can also sell the contract before the game is over if its market price changes.

The same structure can be applied to politics, economics, weather, cryptocurrency, entertainment, scientific developments, and countless other events.

That simplicity is part of what makes prediction markets appealing.

You don’t need to understand a company’s cash flows, calculate a bond’s duration, or analyze a complicated options strategy. You answer a question — yes or no? — and then you put money behind your answer.

Prediction Markets Have Become Enormous

Prediction markets are no longer a niche corner of the internet.

A Pew Research Center analysis of data from The Block found that combined monthly global trading volume on Kalshi and Polymarket rose from less than $5 billion in September 2025 to about $24 billion in April 2026.

One thing worth being precise about: that figure is notional contract volume — the face value of contracts traded, counting each contract at $1. It is not the amount people wagered, and it is certainly not the amount people lost. A single contract can change hands many times. The number tells you the activity has exploded. It does not tell you how much money left anyone’s pocket.

Sports have become particularly important. In that same analysis, sports accounted for 80% of total trading volume on Kalshi from July 2024 through April 2026. On Polymarket, sports (39%), politics (32%) and cryptocurrency (20%) together made up about 91% of activity.

That matters when thinking about gambling risk.

The popular image of a prediction market might be an economist using collective intelligence to forecast inflation.

The reality for a large portion of today’s volume looks much closer to this: who wins tonight? What will the spread be? Will the total go over? Who wins the tournament?

Prediction markets and sportsbooks increasingly occupy overlapping territory.

So, Are Prediction Markets Gambling?

There are really three different questions hiding inside this one.

Legally, the answer is complicated

Certain prediction-market event contracts in the United States are offered through exchanges regulated by the Commodity Futures Trading Commission (CFTC).

Kalshi, for example, operates as a federally regulated designated contract market. Robinhood is not itself an exchange — it routes event contracts through CFTC-regulated exchanges as a registered futures commission merchant.

From that perspective, these products are treated as financial derivatives rather than ordinary sportsbook bets.

But states have challenged that distinction, particularly when prediction markets offer contracts that appear nearly identical to traditional sports wagering. Illinois is one of them.

The Illinois Gaming Board has taken the position that offering sports wagering in Illinois without an IGB license is not permitted, and has acted against prediction-market operators on that basis. In April 2026 the CFTC responded by suing officials in three states — Illinois, Arizona and Connecticut — arguing that federal commodities law gives the CFTC exclusive jurisdiction over federally regulated event contracts. In the Illinois case the named defendants include Governor JB Pritzker, Attorney General Kwame Raoul, and members of the Illinois Gaming Board.

It has kept moving since. Illinois enacted a transaction tax on prediction-market trades effective July 2026, and the CFTC amended its complaint the same month to challenge it. Kalshi filed its own suit against Illinois. Similar actions have followed against additional states.

Attorney General Raoul — writing to the CFTC alongside a bipartisan group of 41 attorneys general, before he became a defendant — put the states’ argument this way: “users can place the exact same wagers that can be made through sports betting, which some markets even refer to as bets, yet these markets face no regulation.”

So the legal question cannot be reduced to “prediction markets are gambling” or “prediction markets aren’t gambling.” The classification depends on the product, the platform, the jurisdiction, and a legal landscape that is changing month to month. (Regulatory status described here is current as of August 2026 and no final ruling had been issued.)

Financially, prediction markets are different from traditional investing

Buying Apple stock gives you an ownership interest in a business expected to produce economic value over time. Buying a Treasury bond gives you a contractual stream of payments.

An event contract is different. It generally resolves around a defined outcome and pays based on whether that outcome occurs.

In that sense, many prediction-market contracts have more in common with wagering than with long-term investing.

That doesn’t make them inherently irrational. A business might use a weather contract to hedge against an unusually rainy summer. A sophisticated trader may identify genuinely mispriced probabilities. Prediction markets can also aggregate information surprisingly well.

But saying that a market can efficiently aggregate information does not tell us whether an individual person’s behavior within that market is healthy.

Clinically, I care much more about how you’re using it

This is where the distinction becomes clearer.

Suppose one person puts $100 into a prediction market a few times a year, researches the contracts, accepts losses, and never thinks about it afterward.

Another person checks Kalshi 40 times per day, trades sports during work, increases position sizes after losing, moves money from savings into the account, lies to their spouse about losses, and stays awake waiting for political markets to move.

They may technically be using the same financial product. Clinically, they are doing very different things.

The label on the app doesn’t determine whether your behavior has become compulsive.

Prediction Markets Can Be Both Useful and Gambling-Like

One mistake would be to dismiss prediction markets as nothing more than casinos with financial terminology. That’s not accurate.

Prediction markets have legitimate uses. Researchers have studied them for decades because markets can aggregate dispersed information and produce useful forecasts. Businesses can potentially use event contracts to hedge against weather, economic announcements, or other real-world risks.

Kalshi has published its own research reporting that its market probabilities become increasingly well calibrated as events approach resolution, particularly in markets with more volume and more participants. That is worth knowing — and worth reading with the obvious caveat in mind: it is research published by the exchange, about its own product, not peer-reviewed and not independently replicated. The company itself calls the participation finding “preliminary evidence.”

It also measures something different from what a worried trader wants to know. A market can price events accurately in aggregate while most individual participants still lose money. A separate Pew analysis of Polymarket users found that most sports traders roughly break even or post small losses.

The fact that prediction markets can produce useful information doesn’t eliminate addiction risk.

Sportsbooks also generate reasonably efficient odds. Poker involves significant skill. Financial markets contain real information. A person can still develop a gambling problem around all of them.

The relevant clinical question isn’t “is there skill involved?” It’s: what is happening to my behavior when money, uncertainty, excitement, and rapid feedback come together?

Why Prediction Markets Can Become So Compelling

Prediction markets combine several features that can make an activity psychologically sticky.

There is money at risk. Outcomes are uncertain. Prices move constantly. New opportunities appear throughout the day. News becomes financially relevant. Winning can create an immediate sense of being right, while losing can create an equally powerful urge to correct the mistake.

And unlike a weekly lottery ticket, you don’t necessarily have to wait long for another opportunity.

Lose on a basketball game? There is another game tonight. Lose on an economic announcement? A political market is moving. Lose on Bitcoin? There is another price target. Lose on an election contract? Something just happened overseas and a geopolitical market is repricing.

The opportunity to act can become nearly continuous.

The Knowledge Trap: “This Isn’t Gambling Because I Know More Than Other People”

Prediction markets have another characteristic that may be particularly important for highly educated or analytically minded people.

They allow gambling-like behavior to feel intellectually justified.

A sports bettor might say: I know the NFL better than the market. A political trader might say: I understand polling better than everyone buying the other side. A finance professional might believe they have an edge predicting inflation or interest rates. A crypto trader might believe they understand Bitcoin flows better than the crowd.

Sometimes people really do have expertise. But expertise can also create overconfidence.

The more knowledgeable you feel, the easier it becomes to interpret a losing trade as evidence that you should increase your position rather than evidence that you might be wrong.

You read more. You find another data point. You convince yourself the market is irrational. Then you add money.

Related research on speculative trading has found overlap between gambling tendencies and high-risk trading. Studies of cryptocurrency and stock trading, for instance, have found that problem-gambling symptoms travel with speculative trading and with a preference for lottery-like payoffs. That work is cross-sectional and self-report, often in samples of people who already gamble, so it shows association rather than cause — and it studied crypto and equities, not prediction markets specifically. But the pattern is close enough to be worth taking seriously.

You can tell yourself you’re investing. Your behavior can still look remarkably similar to gambling.

When Prediction-Market Trading Starts to Look Like a Gambling Problem

The name of the platform matters less to me than the pattern. Warning signs include:

  • You think about prediction markets throughout the day, or repeatedly check prices when you’re supposed to be doing something else.

  • Your position sizes have gradually increased because smaller trades no longer feel meaningful.

  • You trade primarily for excitement, relief, stimulation, or escape rather than as part of a deliberate financial strategy.

  • You increase your trading after losses because you feel compelled to get back to even.

  • You’ve repeatedly decided to stop, reduce your trading, or set limits, and then broken those limits.

  • You hide your trades, deposits, or losses from your spouse, partner, or family.

  • You’ve begun moving money from savings, credit, investments, or accounts intended for other purposes into prediction markets.

  • Your mood is increasingly determined by whether your positions are winning or losing.

  • You tell yourself one large win will repair previous losses and allow you to finally stop.

  • Prediction-market trading is damaging your finances, sleep, work, relationships, or mental health, but you continue anyway.

None of these individually proves that someone has gambling disorder. But the more familiar they sound, the less useful it becomes to debate whether the platform technically calls the activity “trading.”

Chasing Losses Can Happen Just as Easily in an Event Contract

One of the clearest gambling patterns is chasing losses.

You lose $500 on one market. Now you’re not evaluating the next contract simply because you think it represents a good opportunity. You’re looking for a way to get the $500 back.

You find another market and take a larger position. If that loses, the amount you need to recover increases.

Soon the size of your trades is being determined not by your analysis but by your previous losses.

This is the point where prediction-market trading can shift dramatically. The question changes from is this contract mispriced? to how can I get back to even?

Those may sound similar while you’re in the moment. They are not the same decision.

Once the amount you’ve lost begins determining the amount you’re willing to risk next, you are operating from one of the classic dynamics of problem gambling.

It also tends to get more expensive from there. If the losses have already reached credit cards or loans, recovering financially after gambling losses covers what to do about the debt — and why waiting until the money is sorted out before getting help usually keeps the cycle going.

The same escalation happens in crypto, where positions are open around the clock and there is no closing bell to interrupt the cycle. See crypto trading addiction for how that pattern develops and what to do about it.

Winning Can Reinforce the Problem Too

Losses are not the only danger.

Imagine losing $4,000 and then making it all back on one political or sports market. You may expect the experience to scare you. Sometimes the opposite happens.

The comeback becomes evidence. I knew I could do it. I understand these markets. I perform well under pressure. I just need to trust my analysis.

Now the next time you’re down $4,000, you remember the last comeback.

A lucky recovery can teach exactly the wrong lesson. This is one reason gambling problems can progress even when someone has periods of profitability. The behavior is reinforced not simply by money but by the experience of escaping a loss.

“But Prediction Markets Aren’t the House”

Another argument is that prediction markets differ from casinos because participants generally trade against one another rather than against a sportsbook or casino.

That’s a meaningful structural difference. It is not necessarily a meaningful protection against compulsive behavior.

A poker player is also competing against other players. A day trader may trade against other market participants. Neither fact prevents someone from developing a serious problem.

The presence or absence of a traditional “house” doesn’t change the core behavioral ingredients: risking money, uncertain outcomes, intermittent rewards, repeated opportunities, emotional arousal, and the possibility of chasing losses.

Prediction Markets May Be Especially Risky for People With a History of Gambling Problems

Someone in recovery from sports betting may recognize that DraftKings is dangerous and delete it.

A prediction-market app can feel different. It looks like finance. The language is different. There may be charts, order books, probabilities, market research, and financial-news coverage.

That can create a loophole: I’m not gambling anymore. I’m trading.

For someone with a history of problem gambling, that distinction deserves close scrutiny.

If the same person who used to spend Sunday afternoon chasing NFL bets is now spending Sunday afternoon trading binary sports contracts, the change in terminology may not represent much of a behavioral change at all.

The same concern applies when gambling shifts into options, cryptocurrency, meme coins, or other highly speculative products.

Recovery sometimes involves identifying not just the original behavior, but the function that behavior served. Was it excitement? Escape? Competition? The feeling of having an edge? The fantasy of a financial breakthrough? The need to repair previous losses?

If that underlying function remains unchanged, it can migrate into a new product surprisingly easily.

Prediction Markets and ADHD

There is another reason I would pay attention to prediction markets in people with ADHD or significant impulsivity.

Prediction markets can provide novelty, rapid feedback, stimulation, and an endless stream of new questions. Sports. Politics. Crypto. Weather. Economics. Entertainment. Every market offers something new to analyze and potentially act on.

For someone who is especially sensitive to novelty and reward, the activity can become highly absorbing.

That does not mean ADHD causes prediction-market addiction, and most people with ADHD will never develop a gambling problem. But when ADHD, impulsivity, boredom intolerance, and gambling-like products occur together, the combination deserves attention.

The same person who finds long-term investing painfully boring may find a market resolving in three hours extraordinarily compelling.

How Prediction Markets Differ From Long-Term Investing

A useful question is not whether prediction markets technically belong in the financial system. Ask instead what role the activity plays in your financial life.

Long-term investing typically involves allocating capital toward assets expected to produce long-term growth or income. Successful investing is usually supposed to become relatively boring.

You don’t need Apple to announce something every twenty minutes. You don’t need the S&P 500 to resolve tonight.

Prediction-market trading can be very different. The outcome itself creates the excitement. The market has a conclusion. Someone is right. Someone is wrong. The $1-or-$0 settlement makes that especially clear.

For people vulnerable to compulsive gambling, that clarity can be part of the appeal.

What About Self-Exclusion?

Prediction-market platforms have begun adding responsible-trading tools, and they are worth using. But there are gaps that matter a great deal if you are trying to build a real barrier.

Kalshi offers trading breaks, a monthly deposit cap, and voluntary self-exclusion. Robinhood offers an account-level opt-out from all event-contract trading, arranged through customer support.

Three things to understand before relying on either:

Kalshi’s self-exclusion does not block access through a broker. Kalshi states that self-exclusion does not limit a trader’s ability to reach Kalshi products through a futures commission merchant. Robinhood is exactly that — an intermediary routing orders to Kalshi’s exchange. So excluding yourself on Kalshi may not stop you trading Kalshi contracts through another app. If you are building a barrier, that gap is the first thing to close.

Self-exclusion can freeze open positions. Kalshi says that if you have open positions, you won’t be able to sell them during a self-exclusion period. Robinhood requires positions to be closed first. Close out before you exclude, or you may lock yourself into live financial exposure you can’t exit.

Robinhood also has a cosmetic setting that is not a block. Its “hide sports prediction markets” toggle changes what you see; Robinhood warns you can still trade event contracts for sports regardless. Don’t mistake it for a barrier.

And there is a broader distinction. These are operator-run tools you administer yourself and can generally reverse by asking. That is a different thing from a state program. If you’re already on the Illinois gambling Self-Exclusion List, don’t assume prediction-market products are automatically covered by it.

If you’re trying to create a serious barrier to gambling or gambling-like trading, think in terms of the entire ecosystem rather than one app.

One newer tool is worth knowing about. In April 2026 Kalshi became the first platform to join IC360’s SelfExclude.io, a cross-platform self-exclusion program for prediction markets with terms from one month to one year. As of late August 2026 its live partners are Kalshi and Novig; Robinhood, Polymarket and ProphetX are listed as coming soon. Until a broker actually connects, the caveat above about brokerage access still applies.

If you are trying to quit sports betting and prediction-market trading at the same time, the step-by-step plan in how to stop sports betting treats them as one problem: the same barriers, the same money controls, and the same rule about not creating a loophole based on what the app calls the transaction.

If You’re Worried About Your Prediction-Market Trading

You don’t need to resolve the philosophical question of whether prediction markets “count” as gambling before doing something about your behavior.

Start with a simpler question: is this working for me?

Look at what has actually happened over the last several months. How much have you deposited? How much have you withdrawn? How much time are you spending researching or watching markets? What happens after a loss? Can you take a week away without feeling preoccupied with what you’re missing? Have your position sizes increased? Have you hidden anything? Are you trying to win back money you’ve already lost?

If you aren’t sure whether you still have control, a meaningful experiment is to stop for a period of time.

Not because everyone who trades prediction markets needs to quit. Because your reaction to stopping can tell you something.

If taking a month off sounds straightforward, that’s useful information. If the idea immediately produces bargaining — after football season, after this election, after I get back to even, after this one position resolves — that’s useful information too.

If stopping is the part that keeps not happening, the 24-Hour Betting Shutdown Plan lays out the first day step by step — including closing the broker route, not just the exchange.

The free gambling addiction test on this site uses a validated screening questionnaire and scores your answers in your browser, without sending anything anywhere. It was written with gambling in mind, but the questions are about patterns rather than products, and most of them translate directly.

What Treatment for Prediction-Market Addiction Looks Like

There is no separate DSM-5-TR diagnosis called “prediction-market addiction.” Gambling disorder is in fact the only behavioral addiction recognized in DSM-5-TR; internet gaming disorder appears only in the section for conditions proposed for further study. Clinically, problematic prediction-market use gets assessed under gambling disorder criteria where the presentation fits.

That doesn’t mean clinicians have nothing to work with.

In therapy, I would look at the same behavioral mechanisms that matter in gambling and other forms of high-risk speculative trading.

What triggers the first trade? What makes you continue? What happens after a loss? What happens after a win? How easily can you access additional money? What beliefs make another trade feel justified? Are you seeking money, stimulation, relief, competition, or escape? What happens emotionally when you don’t trade?

The goal is not to argue about whether Kalshi is technically a sportsbook. The goal is to understand why you can’t stop opening it.

Treatment can involve cognitive behavioral strategies for distorted beliefs and chasing, acceptance-based work for urges, practical barriers around money and access, addressing ADHD or impulsivity where relevant, and rebuilding routines that don’t depend on constant financial stimulation.

For some people, the goal may be strict limits. For others — particularly when repeated attempts at controlled trading have failed — abstinence from prediction markets and similar speculative products may make more sense.

The Label Matters Less Than the Pattern

Prediction markets are a genuine financial innovation. They can aggregate information, produce useful forecasts, and in some situations help businesses or individuals hedge real-world risks.

They can also provide nearly continuous opportunities to risk money on uncertain outcomes.

Those facts are not mutually exclusive.

The most useful question isn’t “is Kalshi gambling?” It’s: what is happening when I use it?

If you’re researching markets for hours, increasing your risk, chasing losses, concealing trades, thinking constantly about getting back to even, or repeatedly failing to stop, calling the activity “trading” does not make those patterns less concerning.

You don’t have to wait until prediction markets have cost you everything before taking them seriously.

I work with people struggling with gambling, sports betting, high-risk trading, cryptocurrency, options, and other gambling-like financial behaviors — in person in Chicago and online throughout Illinois and Minnesota.

If prediction markets have stopped feeling like a tool and started feeling difficult to control, that’s enough reason to look at what is happening. Reach out to schedule a consultation whenever you’re ready.

You don’t need to settle the legal definition before you ask for help.

Research & Sources

If you need support now: the Illinois gambling helpline is 1-800-GAMBLER, or text GAMB to 833234. Nationally, call or text 1-800-MY-RESET. If you are in crisis, call or text 988.

This article describes regulatory and platform details as of August 2026 and is general information, not legal or financial advice.

Chris Beerman
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